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Condado de Hidalgo , Texas, USA

Refinancing of Existing Debt for Agua Special Utility District in Texas

Status: Completed

Background

Agua SUD provides drinking water service to 15,968 connections with coverage reaching approximately 99% of households in its service area, while only 9% receive wastewater service through 1,482 connections. However, the utility is currently implementing a project to expand its wastewater system and provide first-time access to nearly 1,850 households in the city of Palmview, which will increase wastewater collection coverage from 9% to 21% of its service area. The utility has entered into an interlocal agreement with the City of Mission to purchase 2.5 million gallons a day of capacity to treat the new wastewater flows collected in Palmview.

Description

The project consists of refinancing up to US$13.0 million in existing debt for Agua SUD. The existing debt has an average interest rate of 4.98%. Refinancing the debt is expected to save the utility roughly US$140,000 in debt service obligations over the next 13 years, providing cash flows for the maintenance and operation of its water and wastewater systems, and the ongoing provision of these essential services.

Objective

The purpose of the Project is to reduce debt service requirements and thus increase available cash flows for the operation and maintenance of existing infrastructure, as well as lessen the possible need to raise rates and help the Utility to continue providing critical water and wastewater services for the benefit of its customers. The refinancing is expected to generate annual savings of roughly US$140,000 during the first 13 years—which represents 24.3% of system repair and replacement expenses and 9% of the Utility’s cost of water production and treatment in 2019—with cumulative savings totaling US$2.7 million over the 30-year tenor of the loan.

Project Financing

Total Project Cost US 13.0M